Want to save money?

Watch this half hour talk by behavioral economist Dan Ariely. One tip -- before you make a purchase with a significant financial implication think what advice you would receive from someone whose judgment you respect would be about the purchase. Another is to think about your future and make a serious decision about how much to save, and then make the saving automatic. Pay cash when you buy things!

Of course behavioral economics should also inform economic policy. If we set up economic institutions in such a way that they encourage economic prudence rather than excess spending, society may be better. We should also realize that a lot of economic behavior is culturally determined rather than based on analytic decision making by the individual economic actor, and public policy might improve behavior by deliberate modification of economic culture.